Citation Nr: 9918522
Decision Date: 07/06/99 Archive Date: 07/15/99
DOCKET NO. 96-29 166 ) DATE
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On appeal from the
Department of Veterans Affairs Regional Office in St.
Petersburg, Florida
THE ISSUE
Entitlement to waiver of the recovery of an overpayment of
vocational rehabilitation subsistence benefits, in the
calculated amount of $2,831.59.
REPRESENTATION
Appellant represented by: Fleet Reserve Association
ATTORNEY FOR THE BOARD
D. Jeffers, Associate Counsel
INTRODUCTION
The appellant served on active duty from December 1970 to
July 1972.
This appeal arose from a July 1995 decision of the Committee
on Waivers and Compromises (the Committee) of the St.
Petersburg, Florida, Department of Veterans Affairs (VA),
Regional Office (RO), which denied entitlement to the benefit
sought based on a finding of bad faith on the part of the
veteran. The appellant canceled his scheduled November 1995
personal hearing.
The Board remanded this case for additional due process
development in January 1998. By decision and supplemental
statement of the case issued in September 1998, the Committee
confirmed and continued its previous finding of bad faith on
the part of the veteran. This claim is once again before the
Board for appropriate disposition.
FINDINGS OF FACT
1. All evidence necessary for an equitable disposition of
the veteran's claim has been obtained by the RO.
2. The veteran was authorized Chapter 31 educational
assistance for full-time undergraduate training for the
period of August 10, 1994 to May 5, 1995.
3. VA subsequently received notification that the veteran
had terminated attendance as a result of a recent surgery for
his nonservice-connected back disorder; mitigating
circumstances were granted with an ending date of
November 30, 1994.
4. The Committee denied waiver of recovery of the debt based
on a finding that the veteran acted in bad faith when he
continued to accept and negotiate erroneous benefit checks
that he knew or should have known that he was not entitled
to.
5. The current evidentiary record reflects no evidence that
the veteran harbored a willful intent to seek an unfair
advantage over VA when he continued to negotiated the
vocational rehabilitation subsistence checks at issue.
CONCLUSION OF LAW
The record on appeal does not establish that the veteran
exhibited bad faith in the creation of the overpayment of
vocational rehabilitation subsistence benefits, in the
calculated amount of $2,831.59; therefore, waiver of
indebtedness is not precluded. 38 U.S.C.A. §§ 5107, 5302
(West 1991); 38 C.F.R. § 1.965(b) (1998).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
The veteran's claim is well grounded within the meaning of
38 U.S.C.A. § 5107(a) (West 1991). That is, the Board finds
that he has presented a claim which is plausible. The Board
is also satisfied that all relevant facts have been properly
developed. The record is devoid of any indication that there
are other records available which should be obtained.
Therefore, no further development is required in order to
comply with the duty to assist mandated by 38 U.S.C.A.
§ 5107(a) (West 1991).
By rating decision issued in June 1973, the veteran was
granted service connection and assigned a 40 percent
disability rating for traumatic paresis of the left axillary
nerve with painful contracture of the left shoulder and left
arm. This disability rating has been confirmed and continued
to date. It was later determined that the veteran was
eligible for vocational rehabilitation subsistence benefits
from the VA, and he enrolled in full-time undergraduate
training program at Florida Community College (Jacksonville),
beginning in August 1993. His training was essentially
uneventful until the training period at issue in this case
(August 10, 1994 to May 5, 1995).
In August 1994, the veteran's vocational rehabilitation
specialist (VRS) requested that the veteran be provided
medical service by VA due to complaints of neck, back and
left shoulder pain.
A September 14, 1994 Special Report for Training noted that
the veteran had been seen at the VA Clinic earlier that same
day and was told that his x-rays indicated that he had a
compressed disc. He also was informed that he had all of the
symptoms for that diagnosis. A Magnetic Resonance Imaging
(MRI) was scheduled but could not be performed until that
following December. The veteran noted that he was having
extreme difficulty sitting through all of his classes and was
having trouble with one especially. He had not completed a
project which was due the previous day and had difficulty
sitting through the 3.5-hour class. It was noted that the
veteran had been having ongoing problems with his back and
missed most of the last month of the summer semester.
Fortunately, he had understanding professors who allowed him
to make up the work he missed and he was able to pull his
grade point average (GPA) up to the required level. The
counselor noted that the veteran was going to see his
personal doctor in the following week and if the physician
suggested that the veteran could not sit through these long
classes, he would consider dropping two of his four classes.
A January 1995 Special Report for Training reveals that when
the veteran was contacted about his grades, he stated that he
failed every class due to the fact that he underwent back
surgery on November 17, 1994. The counselor noted that the
veteran apparently went to the physician in the beginning of
November because he thought that he was suffering from a
heart attack. He underwent many tests, which revealed that
he had serious back problems. The veteran was thereafter
scheduled for surgery and because of this, he was unable to
complete his classes. The counselor recommended that the
veteran speak with each instructor separately to determine
whether or not he could take an incomplete rather than an
"F." The veteran would have the winter term to complete
the classes but, because of the back surgery and recovery
time, he did not register for classes. It was also noted
that the veteran was unsure of whether he would be able to
return to school in May or not. The veteran explained that
he was to undergo another MRI in order to determine whether
there was another herniated disc. A second surgery had been
discussed, although the veteran was not considering it to be
an option at that time.
A January 23, 1995 letter from the VRS to the veteran
informed him that his vocational rehabilitation program would
be interrupted effective February 23, 1995, due to the fact
that his present medical condition prevents him from
attending school. The VRS reiterated that the veteran meet
with his instructors in an effort to change his grades, and
requested that he send in documentation of his back surgery.
A February 16, 1995 letter from the VRS to the veteran
informed him that his program would be interrupted effective
March 16, 1995 because he failed to send a copy of his grades
for the last school term.
A February 27, 1995 Special Report for Training shows that
the VRS made an unsuccessful attempt to call the veteran to
schedule an appointment, even though the veteran had not
attended school the quarter.
A March 6, 1995 Special Report for Training noted that the
veteran was still working with the college to get his grades
changed. He stated that they [presumably the college] had
not decided how they wanted to handle this. The veteran also
stated that he had recently visited the doctor and was
informed that he had another ruptured disc.
A March 13, 1995 Special Report for Training shows that the
veteran met with his VRS for annual review of his plan under
Chapter 31. It was noted that the veteran was not enrolled
in school due to his November 1994 back surgery. It was
further noted that the veteran's vocational rehabilitation
plan required him to maintain a 2.5 GPA while in school. Due
to the fact that he had to drop out unexpectedly in the prior
term, he received three "F" grades and an "NP." This
brought his overall GPA down to 1.83. An intent to interrupt
letter had been sent out, and the VRS noted that the veteran
was aware that due to his GPA, as well as his nonattendance
at the training institute, he was in an interrupted status.
An April 1995 letter from the VRS informed the veteran that
the 'NP' grade for his math class was still unchanged. The
VRS noted that if the veteran was unable to have the grade
changed within a month, the grade would have to be reported
and he would be placed in an overpayment situation for that
one class.
The evidence of record reflects that in July 1995, the
veteran was informed that his Vocational Rehabilitation
subsistence allowance had been terminated, effective December
1, 1994. This adjustment had resulted in an overpayment in
the calculated amount of $2,831.59.
Later that month, the veteran requested a waiver of
overpayment, noting that he kept his VRS informed of his
inability to attend classes due to his back disorder. He
further claimed that repayment of this debt would cause undue
financial hardship and submitted a VA Form 20-5655, Financial
Status Report, in support thereof.
On July 27, 1995, the Committee notified the veteran that his
request for a waiver was denied because of a determination
that he demonstrated bad faith. The Committee's decision
found bad faith specifically on the bases of "... there was
willful intention on [the part of the claimant] to neglect or
refuse to fulfill some duty or contractual obligation" by
continuing to accept and negotiate erroneous payments.
The law precludes waiver of recovery of an overpayment or
waiver of collection of any indebtedness where anyone of the
following elements is found to exist: (1) fraud; (2)
misrepresentation; and (3) bad faith. 38 U.S.C.A. § 5302
(West 1991). The Board's review of the record reflects that
the Committee has resolved this question against the veteran.
The Committee conceded that the VA exhibited some degree of
fault, as an award adjustment should have been processed in a
more timely manner. Nonetheless, the Committee found, in
essence, that continued acceptance and negotiation of benefit
payments that he knew or should have known he was not
entitled to represented the intentional behavior to obtain
Government benefits to which he was not entitled, which is
necessary for a finding of fraud, misrepresentation, or bad
faith.
Significantly, the Committee's decision of July 1995 found
bad faith specifically on the bases of "... there was
willful intention on [the part of the claimant] to neglect or
refuse to fulfill some duty or contractual obligation."
(Emphasis added). Inasmuch as the United States Court of
Appeals for Veterans Claims (known as the United States Court
of Veterans Appeals prior to March 1, 1999) (hereinafter,
"the Court") had recently invalidated the above-cited
emphasized phrase as an appropriate basis for a bad faith
determination, in Richards v. Brown, 9 Vet. App. 255 (1996),
the Board remanded this case for additional due process
development in January 1998. By decision and supplemental
statement of the case issued in September 1998, the Committee
confirmed and continued its previous findings of bad faith
utilizing the operative language in 38 C.F.R. § 1.965(b)(2)
(1998).
After thoroughly reviewing the evidentiary record, the Board
is of the opinion that it has not been shown that the
veteran's continued acceptance and negotiation of his benefit
checks involved an intent to receive an unfair advantage.
Rather, as contended above, the veteran reasonably believed
that he would continue to receive payments while VA
determined whether or not his nonservice-connected back
disorder precluded his participation in the rehabilitation
program. Although the veteran apprised VA of his status in
January 1995, it is noted that his payments were not formally
terminated until late-June 1995. In the interim, the Board
observes that the veteran received 'cryptic' correspondences
from his VRS as to the effective date of interruption of his
program. In January 1995, the veteran was informed that his
program would be interrupted on February 23, 1995 due to the
fact that his medical condition prevented him from attending
school. Yet, a subsequent February 1995 letter from his VRS
stated that his program would be interrupted effective March
16, 1995 because he failed to submit copies of his grades.
Although the March 1995 Special Report of Training suggests
that the veteran was aware that he was in an interrupted
status, it appears that he was once again given indications
to the contrary in the form of continued receipt of benefit
payments. As such, the Board accords doubt in favor of the
veteran and finds that a showing of intention to take unfair
advantage of the Government has not been made.
Under these circumstances, waiver of recovery of the
overpayment of vocational rehabilitation subsistence
benefits, in the calculated amount of $2,831.59, is not
precluded because of bad faith.
In reaching this conclusion, however, the Board intimates no
opinion as to whether waiver of the recovery of the
overpayment is otherwise in order.
ORDER
Having found that waiver of recovery of the overpayment of
vocational rehabilitation subsistence benefits is not
precluded by bad faith, the appeal is granted.
REMAND
In view of the favorable decision regarding the absence of a
statutory bar to consideration of waiver of recovery of the
overpayment of vocational rehabilitation subsistence
benefits, the case must be remanded to the Committee for
additional development and adjudication. The issue remains
as to whether recovery of the overpayment should be waived
under the standard of equity and good conscience. Since the
statement of the case indicates that this issue was not
adjudicated by the RO, the Board may not now address the
question of whether recovery of the overpayment would be
against equity and good conscience; to do so would result in
prejudice to the veteran, as he has not had adequate notice
and opportunity to be heard with regard to the standards
applicable to equity and good conscience. Bernard v. Brown,
4 Vet. App. 384 (1993).
In light of the foregoing, and in keeping with VA's duty to
assist claimants in the development of facts pertaining to
their claims, 38 U.S.C.A. § 5107(a) (West 1991); 38 C.F.R. §
3.103(a) (1998), the Board finds that further development is
in order prior to appellate disposition of this case.
Accordingly, the Board hereby REMANDS this case to the RO for
the following actions:
1. The veteran should be furnished a
Financial Status Report (VA Form 20-
5655), and be afforded the opportunity to
provide current income and expense data.
2. Thereafter, the Committee should then
consider the veteran's request for
waiver, in light of the available record,
with full consideration given to all
elements of the principles of equity and
good conscience set forth by 38 C.F.R. §
1.965(a) (1998). A formal, written,
record of the Committee' s decision,
including an analysis of the various
elements to be considered, should be
prepared and placed in the claims folder.
A supplemental statement of the case is
not the appropriate means for
accomplishing this task, under proper
appellate guidelines.
3. In the event the determination
remains adverse to the veteran, he and
his representative should be furnished a
supplemental statement of the case in
accordance with the provisions of 38
U.S.C.A. § 7105 (West 1991), which fully
sets forth all laws and regulations
pertaining to his appeal, including 38
C.F.R. §§ 1.963, 1.965 (1998). This
document should further reflect detailed
reasons and bases for the decision
reached. A reasonable period of time in
which to respond should be given.
Thereafter, the case should then be returned to the Board for
further appellate consideration, if otherwise in order. By
this REMAND the Board intimates no opinion, either factual or
legal, as to the ultimate determination warranted in this
case. The purpose of the REMAND is to further develop the
record. No action is required of the veteran until he
receives further notice.
This claim must be afforded expeditious treatment by the RO.
The law requires that all claims that are remanded by the
Board of Veterans' Appeals or by the United States Court of
Appeals for Veterans Claims for additional development or
other appropriate action must be handled in an expeditious
manner. See The Veterans' Benefits Improvements Act of 1994,
Pub. L. No. 103-446, § 302, 108 Stat. 4645, 4658 (1994),
38 U.S.C.A. § 5101 (West Supp. 1999) (Historical and
Statutory Notes). In addition, VBA's Adjudication Procedure
Manual, M21-1, Part IV, directs the ROs to provide
expeditious handling of all cases that have been remanded by
the Board and the Court. See M21-1, Part IV, paras. 8.44-
8.45 and 38.02-38.03.
A. BRYANT
Member, Board of Veterans' Appeals